Nigeria’s Net Domestic Credit (NDC) declined sharply by 12.8 percent year-on-year to ₦98.97 trillion in August 2025, according to the latest Money and Credit Report published by the Central Bank of Nigeria (CBN).
The NDC which represents the total credit extended by the banking sector to both the public and private sectors recorded significant contractions in both components, reflecting tighter monetary policy and cautious lending behavior in a challenging macroeconomic environment.
In August 2025, credit to the federal government stood at ₦23.133 billion, down from ₦39.391 billion in the same period of 2024. Meanwhile, credit to the private sector dropped to ₦75.843 billion, compared to ₦74.072 billion a year earlier.
“A decline in net domestic credit at this scale is a signal of contraction in credit supply, especially to businesses,” said Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE). “While monetary easing is welcome, it must be complemented by fiscal measures to ensure that productive sectors are not starved of funds.”
Analysts attribute the drop to the CBN’s efforts to stabilize inflation, manage liquidity, and discourage speculative lending. The slump also comes amid lingering inflationary pressures, weak demand, and persistent foreign exchange volatility.
The contraction in domestic credit has raised concerns over access to funding for businesses, especially small and medium enterprises (SMEs), which heavily depend on bank loans for expansion.
“Credit remains the lifeblood of business growth. A sustained fall in credit availability could throttle investment and stifle recovery in manufacturing, agriculture, and services,” cautioned an economist based in Lagos.
The drop also signals caution within the banking sector, which may be prioritizing quality over quantity in loan originations to avoid nonperforming exposures amid macro uncertainties.
Some believe this trend could delay economic rebound unless the government and CBN coordinate to stimulate credit flows. “Monetary policy can do only so much. Infrastructure investment, tax incentives, and regulatory certainty are essential companions,” added Dr. Yusuf.
Before August 2025, the NDC showed volatile monthly movements: it rose from ₦102.406 billion in January to ₦103.369 billion in February, before plunging 34% in March to ₦68.177 billion. By April, it recovered somewhat to ₦102.002 billion.
Despite these fluctuations, the year-on-year decline marks the steepest sustained drop in recent memory.
Going forward, observers will track how banks respond to the CBN’s Monetary Policy Committee (MPC) decisions, including possible further cuts to the Monetary Policy Rate (MPR), and whether fiscal stimulus will be deployed to reignite credit demand.
